Daily Archives: April 17, 2012
Inflation figures higher than expected – what now for the pound?
As my colleague Ben mentioned this morning we had the latest set of inflation figures from the UK. Surprisingly inflation increased to 3.5% in March from the 3.4% in February, a move that was a little unexpected with many analysts predicting a slight fall. This has halted a five month run of falling inflation and has divided opinion as to whether the Quantitative Easing programme adopted by the Bank of England is actually working. The next big data set to help determining whether QE has been successful will be GDP (Gross Domestic Product) figures for Q1 of 2012. These figures are released on the 25th of April and will be key for the short term direction of the pound. The UK officially finished 2011 in negative growth and another quarter like this will see the UK back in recession. Personally I think we will have a seen a slight expansion in 2012 but I do believe this to be minimal and can therefore not rule out the Bank looking at further QE heading into is next meeting in May. Regular followers of this blog will be aware the impact QE can have on the direction of the currency involved, therefore any talk of more QE is likley to hamper the pounds recent run – should you wish to take advantage with the pound at a near 19 month high against the Euro and close to 1.60 against the US dollar then email Michael at mgv@currencies.co.uk
Sterling exchange movements against the Canadian Dollar
The biggest mover today against the pound was the Canadian dollar. The loonie as it affectionately known moved nearly 1% against sterling following the release of its latest interest rate decision in which the Bank of Canada decided to keep its base rate on hold at 1%. This did little to surprise the market and was very much expected but it was the report following this release from the BOC that led to a strong move for the loonie. The report indicated that the BOC will not rule out future interest rate hikes as economic growth and inflation figures were stronger than forecast. An interest rate hike would tend to lead to an increase in value for the currency involved as it makes it more attractive as an investment opportunity and hence demand will increase. Rumours of future rate moves will also tend to have the same affect, indicated by the move this afternoon. Tomorrows Bank of Canada Monetary Policy Report will give further insight into short term projections for interest rate moves and we may see further swings in the CAD.
As a broker working for currencies.co.uk I am here to try and help private and corporate clients decide when is the best time to trade – we take an active look at the market on behalf of our clients and will happily pass on opinions with regards to recent trends and the direction the amrket may move. Should you have an upcoming currency exchange to arrange and you would like to run through the various contracts we can offer then pleas email me at mgv@currencies.co.uk
Sterling spiked to a 19 month high against the Euro as Fears for Spain persist.
Finally hard pressed UK Importers and British citizens looking to take a trip to Europe have something to cheer about. Yesterday sterling exchange rates strengthened to its highest level since September 2010. The volumes on buying Euros yesterday went through the roof and it was one of the busiest days that we have had on the trading floor recently.
The rise in the rate came on the back of renewed fears about the Eurozone debt crisis. The Bank of Spain indicated their economy fell back into recession with Q1 of this year following in the same path as Q4 of 2011. Spain also saw its borrowing costs jump above 6% again raising fears that it will be the next country in need of a bailout. The biggest concern though for Spain seems to be their struggling banks which are becoming more reliant on emergency loans from the ECB.
The loans that are lent by the ECB to national central banks, who is turn lend to commercial banks who would buy their country’s debts and bring borrowing costs down. While
this happened initially, the markets are afraid of just how much the Spanish banks are relying on cheap ECB loans to stay afloat.
How the story unfolds will be very interesting and there is sure to be peaks and troughs with Euro exchange rates over the coming months.
Be smart with your funds and don’t miss out on these fantastic levels to buy your Euros. Even if you require your Euros over the next few months and don’t have full funds available you can still secure your currency for a small deposit with a forward contract. We have seen all too often that when the pound spikes it has a nasty surprise waiting around the corner and you can see your gains be eradicated very quickly. So don’t delay and inform me on bma@currencies.co.uk what your requirement is and I will make sure that we beat your bank with their quotes on buying or selling Euros. If you wish you may even call me on 01494 787 478 to discuss things going forward. Just ask for Ben Amrany
Inflation figures out this morning for the UK
Today’s inflation figures could be key to how the pound performs today. If we see a rise in inflation from let’s say higher food and energy costs then sterling may be boosted as higher inflation could mean an interest rate hike in the future. We are however expecting to see inflation fall once more and if the fall is more than expected then the pound call weaken and sterling could be back down at around 1.20 against the Euro and 1.58 against the USD.
Please feel free to email me with any questions or queries that you may have in connection with moving money overseas. bma@currencies.co.uk The Authors of this site work for one of the largest currency brokers in the UK and we strive to help you make a saving on your currency exchange by undercutting the rates of exchange that banks offer. Please get in touch at bma@currencies.co.uk or you can now call me on 01494 787 478 and we can discuss your requirement and the options that are available to you. Please just ask for Ben Amrany
New Zealand Prime Minister talks the Kiwi Dollar lower.
Sterling exchange rates have strengthened by over 0.5% this morning against the Kiwi Dollar as last night the New Zealand Prime Minister John Key tried to talk the currency lower yesterday by calling the NZD overvalued even as the country’s economic growth looks set to outpace the UK, EU, and theUS this year.
Key stated “we’re considering what we can do to resist a rising exchange rate” and “kiwi strength was the result of weakness in US and European economies.” The pound is currently down around 3% this year against the Kiwi and the strong economy in New Zealand is meaning that the Reserve Bank of New Zealand are finding it difficult to raise interest rates as this would strengthen the currency even further.
New Zealand have set their interest rates at a low of 2.5% For those of you that require buying NZD if an unlikely rate hike occurs we may see the KIWI continue its run on the pound. At some point New Zealand will probably raise rates this year. If you are holding out for levels of 2.0 or above you may want to move your target level as sterling has been as low as 1.84 this year. Make sure that you are in a position to be able to move on your funds should a movement be favourable before this occurs. If you require buying or selling the KIWI Dollar then please feel free to contact me at bma@currencies.co.uk and we can discuss all the options that may be suited to your situation. You can even call me on 01494 787 478 if you would like to discuss things in more detail. Just ask for Ben Amrany
